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Further Reading

Tesla is creating its own chips optimized for machine learning, CEO Elon Musk said during a call with investors on Wednesday. Musk acknowledged the rumored project last December but is now providing more details.

"We've been in semi-stealth mode for the last two to three years," Musk said.

During that time, Tesla created what Musk described as "the world's most advanced computer specifically for autonomous operation."

Musk said that the new chip, due out next year, will deliver an "order of magnitude improvement in operations per second" compared to "current Nvidia hardware." And the new hardware is designed to be backward-compatible with the current generation of Tesla vehicles, allowing Tesla to swap out the old hardware to give current cars a big performance boost.

Further Reading

The decision to make the chip backward-compatible with current Tesla vehicles may be a tacit admission that the "hardware 2" chip Tesla began shipping two years ago was not, in fact, powerful enough for full self-driving capabilities, despite being marketed as self-driving capable. Musk didn't specify when upgrades might be available to existing Tesla owners or if those upgrades would be offered for free or require an additional payment.

Tesla hired an Apple chip guru for the project

Tesla's chip efforts have been spearheaded by Pete Bannon, an engineer who oversaw the development of the A5 chip at the heart of the iPhone 5 and worked on a number of iPhone chips since then.

"Two years ago when I joined Tesla we did a survey of all the solutions that are out there for running neural networks, including GPUs," Bannon said on the earnings call. He continued:

Pretty much everywhere we looked, if someone had a hammer, whether it was a CPU or a GPU or whatever, they were adding something to accelerate neural networks. But no one was doing a bottoms-up design from scratch, which is what we like to do.

We had the benefit of having the insight into seeing what Tesla's neural networks looked like back then and having projections of what they would look like in the future, and we were able to leverage all of that knowledge and our willingness to totally commit to that style of computing to produce a design that is dramatically more efficient and has dramatically more performance than what we have today.

The key to the chip's performance, Musk added, is to "run the neural net at a bare metal level." Other CPU and GPU chips do neural network calculations "in some kind of emulation mode," he said.

The Tesla chip has the ability to do "a huge number of very simple computations with the memory needed to store the results right next to the circuits doing the matrix calculations," Musk said. For a lot of competing systems, Musk said, "the transfer between the GPU and the CPU ends up being one of the constraints on the system."

Further Reading

Musk said that the result was an order-of-magnitude improvement over current Nvidia chips. But he didn't specify which chips he was talking about, making the comparison somewhat unclear. Tesla adopted Nvidia's Drive PX 2 platform in 2016. Then, last year, Nvidia announced the PX 2 Pegasus, a new platform with 10 times the performance of the original PX 2, due out this year.

If Tesla's chip performance is ten times as good as the PX 2 chips in current Tesla vehicles, that would put them roughly on par with Nvidia's Pegasus chips. On the other hand, if Tesla was planning to deliver a tenfold improvement over Nvidia's Pegasus chips, that could give the company a substantial advantage for the next couple of years. We've asked Tesla for more details and will update if we hear back.

"It's an amazing design, and we're looking to increase the size of our chip team and our investment in that as quickly as possible," Musk said.

I suspect that Jim Keller had a bit of a hand in this as well during his stint at Tesla.

I think thats basically guaranteed.The question is is this something like nvidia’s tensor cores, or different, the idea that the memory is right next to the processing, suggests a chip design more like IBM’s recent attempts. Which was rather successful apparantly (sorry i cannot remember the name)

I believe Musk has said that if a different computer is required to run Tesla autonomous driving software, it would be retrofitted at no cost.

Is it required though? This is probably a cost saving measure in the long run. Their own chip may be cheaper and could potentially use less energy (improving mileage), but I suppose the Nvidia chip will still be capable of running the NN.

I suspect that Jim Keller had a bit of a hand in this as well during his stint at Tesla.

I think Jim Keller was instrumental in luring several other AMD chip designers to Tesla, but he himself, as more of a CPU architect, was probably less involved in the design than his colleagues with more of a GPGPU background. He got the project started and then moved on.

This chip sounds pretty much exactly like the Google TPU, which gains much of its performance advantage over Nvidia GPUs by virtue of being tied to a single neural network library (Tensorflow in this case). Tesla might have optimized for a different library and could have possibly made their hardware architecture even more narrowly targeted at their specific use-cases because they are not trying to market this chip as a cloud computing resource.

One thing is for sure: these kinds of specialized neural network processing chips are not a fad and will displace a significant amount of demand for GPGPUs, because not all applications require the flexibility that GPUs offer, and some applications (like autonomous driving) are so valuable that they justify the development of ASIC solutions.

I like Tesla but here is a radical crazy idea. How about they focus on making lots of cars and become crazy profitable and then decide to become a semiconductor manufacturer.

Production volume! Production volume! Production volume! That is what will decide the future of Tesla.

There is a difference between designing chips and manufacturing them. Like Apple designs, but outsources manufacturing to companies like Foxconn. Probably this is what's Tesla's doing, I don't think they have the chops for chip manufacturing currently.

I like Tesla but here is a radical crazy idea. How about they focus on making lots of cars and become crazy profitable and then decide to become a semiconductor manufacturer.

Production volume! Production volume! Production volume! That is what will decide the future of Tesla.

It is part of making cars these days and in the near future.

It isn't a core requirement? Does Tesla produce their own tires, do they smelt their own steel, do they mine their own copper ore?

Yes it may be a good idea for Tesla someday to design their own chips. It might also be a terrible idea and they go back to using an OEM. Regardless it will not affect their ability to ramp up production and become profitable over the next couple years one way or the other.

I believe Musk has said that if a different computer is required to run Tesla autonomous driving software, it would be retrofitted at no cost.

Is it required though? This is probably a cost saving measure in the long run. Their own chip may be cheaper and could potentially use less energy (improving mileage), but I suppose the Nvidia chip will still be capable of running the NN.

Nvidia themselves said two Drive PX modules and two dedicated GPUs were required for "auto chaufer", which I assume to be similar to Teslas future autonomy. Which was why it was interesting that Tesla only used one.

Seems to me they keep making the same mistakes, trying to reinvent everything.

Look at this production device!!

Uhmm, you mean that table?

Yes it is terrible! Too many legs... next, fire Good Year, we are going to engineer our own rubber, made from carbonized disposable drinking straws! Pull Team A off of video game center console design! We need drinking straw tires!

At a time when everyone is trying to make neutral networks run fast, why make your own hardware? Most of the new GPUs have hardware that is dedicated to running neural networks. They are quite literally adding features that have no current use outside of accelerating neural networks.

Price and availability.

While it had tapered off lately, the market for GPUs was ridiculous, with cryptocurrency miners inflating the prices, and reducing the availability.

If you're using it for neural nets, why pay for the parts of the GPU you don't need?

And although Google and others are making their own neural-net specific chips, they're not necessarily making them available for anyone else to buy, especially not in the quantities that Tesla might need.

They are going to have a very tough time making good on the promise to retro-fit existing cars that paid for "full self-driving". The chipset isn't the half of it - existing cars are likely to be missing many of the sensors required for full self-driving, when that comes.

I like Tesla but here is a radical crazy idea. How about they focus on making lots of cars and become crazy profitable and then decide to become a semiconductor manufacturer.

Production volume! Production volume! Production volume! That is what will decide the future of Tesla.

It is part of making cars these days and in the near future.

It isn't a core requirement? Does Tesla produce their own tires, do they smelt their own steel, do they mine their own copper ore.

Yes it may be a good idea for Tesla someday to design their own chips. It might also be a terrible idea and they go back to using an OEM. Regardless it will not affect their ability to ramp up production and become profitable over the next couple years one way or the other.

At a time when everyone is trying to make neutral networks run fast, why make your own hardware? Most of the new GPUs have hardware that is dedicated to running neural networks. They are quite literally adding features that have no current use outside of accelerating neural networks.

No, GPUs are still pretty awful for power and cost in neural network inference.

The only GPU with the features you're talking about is also backed by several billion transistors dedicated to FP32/FP64 and video game rendering.

At a time when everyone is trying to make neutral networks run fast, why make your own hardware? Most of the new GPUs have hardware that is dedicated to running neural networks. They are quite literally adding features that have no current use outside of accelerating neural networks.

Price and availability.

While it had tapered off lately, the market for GPUs was ridiculous, with cryptocurrency miners inflating the prices, and reducing the availability.

If you're using it for neural nets, why pay for the parts of the GPU you don't need?

And although Google and others are making their own neural-net specific chips, they're not necessarily making them available for anyone else to buy, especially not in the quantities that Tesla might need.

Tesla should be buying on a lead time at fixed price, like video card manufactures.

I believe Musk has said that if a different computer is required to run Tesla autonomous driving software, it would be retrofitted at no cost.

It’s going to be interesting to see where the promise of FSD for now several year old cars ends. Probably not with FSD. Refund?

I would imagine so. That or class action lawsuit. Looking at used Tesla for sale FSD only appears as an option for about 4% of vehicles. At least with EAP you get something today with the promise of it being better in the future.

They are going to have a very tough time making good on the promise to retro-fit existing cars that paid for "full self-driving". The chipset isn't the half of it - existing cars are likely to be missing many of the sensors required for full self-driving, when that comes.

He reconfirmed in the conference call that Autopilot v2.0 cars have the necessary sensors to allow for full self driving. The new chip is specifically designed to allow for a direct swap out of the old chip. Basically, remove the old chip, plug the new one in, software update, and voila, done.

I like Tesla but here is a radical crazy idea. How about they focus on making lots of cars and become crazy profitable and then decide to become a semiconductor manufacturer.

Production volume! Production volume! Production volume! That is what will decide the future of Tesla.

It is part of making cars these days and in the near future.

It isn't a core requirement? Does Tesla produce their own tires, do they smelt their own steel, do they mine their own copper ore.

Yes it may be a good idea for Tesla someday to design their own chips. It might also be a terrible idea and they go back to using an OEM. Regardless it will not affect their ability to ramp up production and become profitable over the next couple years one way or the other.

For reasons still unclear to me, they do make their own seats.

If I’m not mistaken, seats in particular were brought in house because Tesla had problems with third party vendors jerking them around on things like price (charging well above materials + labor) and schedule (promising X number of seats by Y date and then failing to do so, leaving Tesla unable to finish manufacturing a bunch of cars).

I like Tesla but here is a radical crazy idea. How about they focus on making lots of cars and become crazy profitable and then decide to become a semiconductor manufacturer.

Production volume! Production volume! Production volume! That is what will decide the future of Tesla.

I'm with you on the crawl before you walk sentiment, but you're smoking crack if you think their future depends purely on production volumes.

Major manufacturers sell millions of vehicles per year.

Tesla will never sell millions of vehicles per year. Their future depends on being able to continue to carve a profitable niche out in an increasingly crowded electric space. They need to think like Apple, not Microsoft.

I like Tesla but here is a radical crazy idea. How about they focus on making lots of cars and become crazy profitable and then decide to become a semiconductor manufacturer.

Production volume! Production volume! Production volume! That is what will decide the future of Tesla.

It is part of making cars these days and in the near future.

It isn't a core requirement? Does Tesla produce their own tires, do they smelt their own steel, do they mine their own copper ore.

Yes it may be a good idea for Tesla someday to design their own chips. It might also be a terrible idea and they go back to using an OEM. Regardless it will not affect their ability to ramp up production and become profitable over the next couple years one way or the other.

For reasons still unclear to me, they do make their own seats.

If I’m not mistaken, seats in particular were brought in house because Tesla had problems with third party vendors jerking them around on things like price (charging well above materials + labor) and schedule (promising X number of seats by Y date and then failing to do so, leaving Tesla unable to finish manufacturing a bunch of cars).

I think it was the monopost seats in the Model X in particular that really soured Tesla on using outside sourcing for those components. The decision to bring them in house seems to be working out well, though--the revised seats in the Model 3 are quite nice.

I like Tesla but here is a radical crazy idea. How about they focus on making lots of cars and become crazy profitable and then decide to become a semiconductor manufacturer.

Production volume! Production volume! Production volume! That is what will decide the future of Tesla.

I'm with you on the crawl before you walk sentiment, but you're smoking crack if you think their future depends purely on production volumes.

Major manufacturers sell millions of vehicles per year.

Tesla will never sell millions of vehicles per year. Their future depends on being able to continue to carve a profitable niche out in an increasingly crowded electric space. They need to think like Apple, not Microsoft.

I am pretty sure that at this time next year, the Tesla Model 3 will be the best selling car in the United States. Not the best selling SUV, truck or minivan, but the best selling Car.

When that happens, I think its going to be hard to think of Tesla as a "niche" manufacturer.

Tesla is planning on doing just that, and relatively soon. They want to make 600k Teslas in the US, 500k in the Chinese factory, and they're already in talks for an additional factory in Europe. That's before the Model Y, which is targeting a production volume that will nearly double those figures. Longer term, they want to build even more factories and expand into the truck and subcompact markets.Put it all together, and Tesla is targeting a much larger chunk of the market then you seem to think. And investors must think so too, because their valuation does not make sense if you think they're destined to be a small-volume niche player.

He reconfirmed in the conference call that Autopilot v2.0 cars have the necessary sensors to allow for full self driving.

Elon says many things. Some of them occasionally reflect reality.

It's quite bold to say, "These cars have all the sensors required for full self driving!" when they don't have a full self driving car on those sensors yet.

Every indication is that Tesla (or, at least, Elon - can't speak for the engineers actually working on it) assumed that self driving was one of those super easy, "Hey, we know software and are more agile than those old legacy dinosaur automakers!" things that nobody had gotten around to doing, and they were going to just toss a couple coders on it and disrupt the world.

And, in fact, it turns out to be a really hard problem. Especially with their sensor suite. Waymo is happily self driving around very well mapped areas successfully, but even they don't have a general self driving solution, as it requires very precise mapping data in the areas they're driving. It works, but that they can drive in Phoenix doesn't mean they can, say, drive in a Buffalo blizzard.

Silicon Valley companies have demonstrated a strong overconfidence that "Being good at stuff in the synthetic world of the internet" means they're competent in "the nasty world of physical reality," and that's not often the case.

I believe Musk has said that if a different computer is required to run Tesla autonomous driving software, it would be retrofitted at no cost.

It’s going to be interesting to see where the promise of FSD for now several year old cars ends. Probably not with FSD. Refund?

The subset of owners who have paid for FSD (I am one of them) have paid in advance for features that are still in development. There was a promise at the time of purchase that any required hardware updates would be provided without additional cost. I expect them to honor that agreement, and given the premium that we paid for it (those funds are set aside), I don't expect that will be a problem for them.

Honest question but I remember hearing Tesla will never sell more than a few thousand vehicle, then it was they will never sell hundreds of thousand of vehicles, now it is they won't sell millions. I am pretty sure Tesla's own analysis is they will be profitable at a 400K vehicle runrate so millions is not absolutely required but I am not sure why you think they couldn't. Never is a very long time.

I believe Musk has said that if a different computer is required to run Tesla autonomous driving software, it would be retrofitted at no cost.

It’s going to be interesting to see where the promise of FSD for now several year old cars ends. Probably not with FSD. Refund?

The subset of owners who have paid for FSD (I am one of them) have paid in advance for features that are still in development. There was a promise at the time of purchase that any required hardware updates would be provided without additional cost. I expect them to honor that agreement, and given the premium that we paid for it (those funds are set aside), I don't expect that will be a problem for them.

and if they can't deliver FSD before you car reaches end of life you are cool with that or would you demand a refund?

Hardware is the easy part the issue is software. I love my EAP but Tesla Full Self Driving is pretty much unicorn farts at this point. My guess is more than a decade away.

I like Tesla but here is a radical crazy idea. How about they focus on making lots of cars and become crazy profitable and then decide to become a semiconductor manufacturer.

Production volume! Production volume! Production volume! That is what will decide the future of Tesla.

It is part of making cars these days and in the near future.

It isn't a core requirement? Does Tesla produce their own tires, do they smelt their own steel, do they mine their own copper ore?

Yes it may be a good idea for Tesla someday to design their own chips. It might also be a terrible idea and they go back to using an OEM. Regardless it will not affect their ability to ramp up production and become profitable over the next couple years one way or the other.

For where Tesla has positioned themselves, I think it is absolutely a core requirement. Relying on 3rd party GPU based computers for their FSD was an extremely questionable proposition for a heavily advertised feature of their cars (and is part of the reason I didn't pay for FSD with my Model 3), whereas a custom designed chip focused on the very specific needs of their neural net makes the feature viable (not guaranteed to work, but viable). Tesla failing to execute on FSD in the nearish future would be a gigantic black eye to the brand and a major setback financially, so I think hiring some of the best and brightest in chip design to create a custom architecture was definitely the correct move on their part. I really see no potential downside to the effort and massive potential upside.